The Office of Inspector General for Health and Human Services (“OIG”) recently issued its 2016 Work Plan, which sets the agenda for its auditing and investigation in the year ahead. The broad mandate of the OIG is to eliminate fraud, waste and abuse. With the requested FY 2016 budget of $417 million, the OIG will continue its fraud-fighting efforts and heighten it focus on reducing waste in HHS programs. Waste includes not only fraud, but also unnecessary services, inefficient delivery of care or service, poor quality of care or services, inflated prices, excess administrative costs, or mismanagement of grant or contract funds. With a 2015 track record of $3 billion in recoveries; 4,112 provider exclusions from participation in federal health care programs; 925 criminal actions and 682 civil and administrative enforcement actions and a return on investment of $8 for every $1 spent, the OIG is a force to be avoided. The yearly work plan provides a list of priorities for the office, and in turn gives providers insight into areas of concern in practice. The following areas are on OIG’s radar for the coming year:

Hospitals

While not a new focus, the OIG will review data from cost reports to identify salary amounts in operating costs for reasonable remuneration for managerial, administrative, and professional services. While Medicare does not provide any specific limits on salary amounts, amounts paid must be reasonable.

The OIG will also focus on outpatient and inpatient stays under the two-midnight rule to see whether physicians are using the correct criteria when deciding whether to admit beneficiaries as inpatients or treat them as outpatients.

The OIG will also review claims for certain Medicare Severity Diagnosis Related Group assignments that require mechanical ventilation to determine whether the DRG have been appropriately billed. The review will include claims for beneficiaries who received over 96 hours of ventilator care.

Nursing Homes

Because of successful recovery of Medicare payments for therapy in nursing homes, the OIG has announced a new focus on the documentation requirements specified in 42 CFR Section 483.20 to insure that SNF care is reasonable and necessary. These documentation requirements include (1) physician order at the time of admission; (2) comprehensive assessment; and (3) a comprehensive plan of care prepared by the interdisciplinary team that includes the attending physician, RN, and other appropriate staff. Nursing home compliance staff should focus on reviewing documentation to assure compliance.[1]

Hospice

Once again, the OIG will review the use of general inpatient care level of the Medicare hospice benefit, to assess whether this level of care is medically necessary. The OIG sill also focus on beneficiary plans of care to determine whether they meet the key requirements.

Home Health Services

Carried over from the 2015 work plan is a focus on whether home health prospective payment system claims met required standards. Earlier reports determined that at least one in four home health agencies had questionable billings, and newly-enrolled agencies have a record of greater fraud, waste, and abuse. OIG claims that nearly $1 billion of improper or fraudulent payments relating to the home health benefit have been made since 2010.

Medicaid payments for adult day care services will also face continued scrutiny, as prior OIG work shows that payments are not always in compliance with regulation.

Equipment and Supplies

Orthotic braces seem to be a prime target for OIG in 2016, with no less than two new listings in the 2016 work plan. First, OIG will be reviewing Medicare Part B payments to ensure that payments made to suppliers were medically-necessary and provided in accordance with Medicare requirements. OIG will also be looking that the reasonableness of the Medicare fee schedule as compared to amounts paid by non-Medicare payers, implying that OIG believes Medicare is getting a raw deal.

Other Providers

Chiropractic services are once again on the hot seat, as the CMS has determined that chiropractic maintenance therapy is not considered medically reasonable and therefore non-compensable. Medicare Part B does pay for chiropractic services in a very, very limited set of circumstances, and prior OIG reports documented inappropriate payments for treatments that fall outside those regulations.

OIG will also turn once again to sleep disorder clinics, due to high utilization of sleep-testing procedures billed to Medicare. The concern is that beneficiaries are being tested in the same manner multiple times when prior test results are still valid and further testing is unnecessary.

Ambulatory Surgery Centers are also new on the list and targeted for quality due to the low rates of certification surveys conducted by state agencies and poor oversight by CMS.

Prescription Drugs

OIG is changing its focus on prescription drugs under the 340B program, looking to find ways to bring cost savings through 340B discounts back to Medicare. Eligible health care providers are able to purchase prescription drugs at discounted prices under the 340B program, but those providers can then bill Medicare and other insurers for the full price of the drug.

Under Medicare Part D, OIG will also begin to focus on inappropriate drug pairs – drugs that should not be prescribed alongside other drugs due to the potential for severe interactions, among other things.

Managed Care Plans

Medicare Part D (Part D) plan sponsors will be subject to a number of OIG inquiries under the new Work Plan. Among these, OIG will work to determine whether Part D sponsors comply with Medicare requirements for reporting direct and indirect remunerations and, pursuant to an Affordable Care Act (ACA) mandate, review the extent to which plan drug formularies include drugs frequently used by dual-eligible members. The OIG will also review price increases for brand-name drugs under Part D compared to inflation.

As to the Medicaid program, OIG plans a variety of new and reworked investigatory activities. OIG will review state oversight of and coordination with managed care organizations’ drug utilization review programs, particularly for inappropriate dispensing of opiates.

The OIG also will review state payments to Medicaid managed care plans to ascertain if plans are being properly compensated. Previous reviews have found that CMS oversight of state rate setting was in need of improvement and that states were not adequately verifying and auditing plan-reported data used to set rates. Issues surrounding medical loss ratios and payments for services to deceased beneficiaries similarly will be investigated.

Medicaid managed care plans’ efforts to identify fraud and abuse will be an additional area of review. Specifically, the OIG will review whether plans are identifying and addressing potential fraud and abuse and how states oversee the plans’ efforts. Medicaid MCOs must have mechanisms in place to detect and address fraudulent activity of providers and demonstrate that it is policing accordingly.

Beware the Consequences

While the above includes only a portion of the OIG’s ambitions for 2016, the work plan gives providers a heads up about targeted areas, which should precipitate review of these problem areas for providers and managed care plans. The bottom line is that the OIG is continually investigating and has an arsenal of tools that includes access to Medicare and Medicaid payment data. Providers should be vigilant about not just fraud and abuse, but also waste and wary of how waste could easily become overpayments and potential False Claims Act and Stark Law violations. For more information on the 2016 OIG work plan or assistance with compliance with healthcare regulatory law, please contact the attorneys at McBrayer.

Lisa English Hinkle is a Member of McBrayer, McGinnis, Leslie & Kirkland, PLLC. Ms. Hinkle concentrates her practice area in health care law and is located in the firm’s Lexington office. She can be reached at lhinkle@mmlk.com or at (859) 231-8780.

This article is intended as a summary of federal and state law and does not constitute legal advice.